How to Reduce Risks and Successfully Purchase PCBs in China

Introducing EIPC’s workshop on the successful purchasing of printed circuit boards from China, EIPC Vice Chairman Giacomo Angeloni remarked: “Life and printed circuit boards are questions of opportunity. My company has been trading with China since 2000. It is important to manage the relationship, to understand how China works and to understand the philosophy of doing business.”

EIPC Technical Director Michael Weinhold explained the purpose of the workshop: It was an inescapable fact the more than half of the PCBs currently assembled in Europe originate in China, and EIPC has a responsibility to its members help them to understand the supply chain and how to manage it, with the objective of regaining leadership as European PCB fabricators.

Europe needs China as a supplier, mainly because of OEM and EMS demands on price, but also for Chinese local content in the case of electronic assembled parts being imported back into China. PCB fabrication in Europe is vital for the successful integration of PCBs from China, as many of the technologies had been developed in Europe or other countries outside of China. Cost reduction is a major challenge, but to buy the cheapest boards might not be the right answer. It is important to get reasonable value for what is being paid, and to minimise the risk by having good communication and good understanding.

Although he had visited China many times, Weinhold admitted that he had effectively seen only a very small sample of the industry as a whole. During many conversations in English with Chinese PCB manufacturers, he often doubted whether they really understood, although they pretended to, or whether they really meant what they said! Ivan Ho, EIPC Director of Asia Pacific Operations, was instrumental in helping many Western PCB companies purchase successfully in China, and he had recently been appointed EIPC Director of Asian Pacific Activities.

Ho began by explaining that his intention was not to promote the Chinese PCB industry, but to try to encourage the survival of the industry in Europe. “People with offshore purchasing experience can tell a lot of stories…” He was in a position to help bridge the gap of knowledge and understanding, to assist European PCB manufacturers in offering a seamless value-added service to their customers.

“Are you ready for the adventure?” he asked. “Sourcing product from China is hard work; it needs investment of time and effort. Buckle down for the culture shock; you’re going to do some crazy things. You better have a strong stomach!”

“What makes it difficult?” He listed remoteness, bad experiences resulting from doing insufficient homework, language barriers and communication issues, and a survival culture with a “zero-sum” mentality–for someone to win, someone else has to lose. “No one trusts anyone; the expectation is to be cheated. Conflict of interest is seen as a business advantage.”

For those not frightened away by this preamble, Ho stressed the importance for aspiring purchasers of PCBs to clearly understand their needs and objectives, to define their business model, and to know who was already competing in their market (OEM and EMS companies with their own international purchasing offices, PCB traders, overseas PCB manufacturers, local PCB manufacturers). And purchasers must analyse their own values and differentiators to their customers (local service, technical support, local manufacture as quickturn and insurance, quality system) before preparing a detailed shopping list against which to identify their potential suppliers.

How to Reduce Risks and Successfully Purchase PCBs in China

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